But last week, as well as cutting Bank Rate, the MPC also did something unusual.

We decided to inject £75bn of additional money directly into the economy - a process sometimes known as 'quantitative easing' (economists are not the most elegant of wordsmiths).

We did this because, although our past cuts in Bank Rate will continue to boost spending through this year, we felt a further stimulus was necessary.

And, because interest rates cannot fall below zero, we needed to find another way of bringing this about. How will this injection of additional money take place?

We are going to purchase financial assets - in particular government and corporate debt - from the private sector.

However, we won't pay for them by printing extra bank notes. Instead, we will pay the seller with what is, in effect, a cheque drawn on the Bank of England.

The seller then deposits it in their own bank account. And, in due course, they will use that deposit to finance the purchase of goods and services, or else of other assets, raising their values.

Similarly, our purchases of corporate debt such as bonds - which investors are somewhat reluctant to buy at present - should provide them with the confidence that a buyer is around should they need to sell their assets.

That should make it cheaper for companies to borrow from the capital markets. And the greater availability of finance should then make it easier for companies not only to survive and maintain employment, but also to make new investments.

Finally, regardless of who sells the assets to us, the extra money ends up in the banking system.

That in turn should encourage the banks to lend more, leading to a further rise in spending in the economy. Creating new money in this way might sound too good to be true.

Indeed in normal times an injection of extra money of this magnitude might be expected to lead to too much money and spending in the economy and a rise in inflation. But right now, there is not enough money and spending in the economy and that is what we need to rectify.

As the economy recovers, so we will probably need to remove some of the extra money in order to ensure that inflation does not pick up too much.

But that is easily accomplished by pursuing the process in reverse, namely selling the assets that we have bought back to the private sector. There is, of course, a good deal of uncertainty about the precise impact these measures will have. But that is also the case with changes in Bank Rate.

So we will be monitoring the situation closely to see how the quantity of money and credit in the economy and, most importantly, the amount of spending is affected. We have the scope to do more if that proves necessary. But equally, when the time comes, we will be able to change course to prevent inflation taking off.

After a long run of steady growth, low unemployment and low and stable inflation, the economic environment has become infinitely more challenging for households and businesses. But this downturn will come to an end eventually. The measures we announced last week should help ensure that is sooner rather than later.